WHY IS THE EUROPEAN OFFICE MARKET STILL ATTRACTIVE TO INVEST?

  • The office segment stands out from the rest of the assets thanks to the prolonged upward cycle of rental income.
  • According to Savills figures, investors in European real estate continue to focus on the main markets, which still account for 67% of the total volume of investment in Europe.
  • “The office market in Madrid is one of the busiest in Europe”.

The office market continues to offer the best investment opportunities in real estate in Europe, according to the latest report prepared by the international consultancy Savills Aguirre Newman . The impulse of the market of investment of offices in the continent is fomented by the enterprise expansion, the growth of the use and an important demand of new spaces of work that include all the technological advances and of innovation.

In certain European countries, other types of assets, such as hotels, rental housing, student and elderly residences, are good opportunities, however, the offices segment stands out from the rest of the assets thanks to the prolonged upward cycle of rental income, development of new projects and the constancy of long-term income for the owners.

Lydia Brissy, Director of Research Europe at Savills, indicates that “prime offices in business districts (CBD) will continue to offer important opportunities for core investors in Amsterdam, Athens, Barcelona, Brussels, Copenhagen, Lisbon, London, Luxembourg, Madrid, Milan, Oslo, Paris, Prague and The main cities of Germany, Poland and Sweden. Investors seeking value-add opportunities can consider retail in cities such as Dublin or in the remodeling of the main shopping streets of Milan and Oslo, as well as new developments or rehabilitations of office assets in the suburbs of Brussels, Paris and Prague. ” “Another interesting investment opportunity that we have identified is the (re) development in cities with a strong urbanization through the creation of centers and poles of innovation in Lisbon, London, Paris, Amsterdam, Berlin, Bucharest,

In Spain, Alejandro Campoy, director of capital markets at Savills Aguirre Newman, explains that “the lack of product in prime locations has diverted the attention of investors who normally look for this type of product to locations and type of product plus value-add. In fact, Madrid’s office market is one of the largest in Europe through rehabilitation and updating of stock, with a much higher increase in rents compared to non-renovated buildings and still more than 80% of the stock without updating. “

For the consultant, the real estate sector in Europe continues to be one of the asset classes most demanded by investors and the total volume of capital invested continues to grow. The margin between the average yield of the 10-year bonds and the yield of a prime office asset is 248 basis points in the second quarter of 2018, compared to 180 basis points in 2008 and an average of 237 basis points to 10 years.

According to Savills figures, investors in European real estate continue to focus on the main markets, which still represent 67% of the total volume of investment in Europe, in line with previous years, but increasingly seek opportunities in secondary markets. Although offices continue to be the preferred segment in Europe, despite the compression of yields, in Spain, the lack of product and the opportunities at Fuente Savills Research retail will lead, for the second year in a row, to be the latter type of asset. that accumulates most of the investment, with a 39% share adding traditional retail and High Street at this time.

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